FYI
-----Original Message-----
From: J. William Semich (NIC JWS7) <bsemich&#167;users.org>
To: pab&#167;gtld-mou.org <pab§gtld-mou.org>
Date: Wednesday, 30 September 1998 15:47
Subject: PAB The New IANA Needs Fiscal Controls


>The New IANA Bylaws: Who Controls the Money?
>
>By J. William Semich
>President and CFO 
>.NU Domain Ltd
>http://whats.nu
>bsemich&#167;mail.nu
>
>
>The latest set of proposed bylaws (version 5) for the New IANA
>Corporation (Internet Assigned Numbers Authority), released on September
>29 at IANA's Web Site at http://www.iana.org/bylaws5.html, is seriously
>flawed by its lack of fiscal accountability to all of us who will use
>its services and pay its fees. 
>
>If the bylaws are approved unchanged by the White House as the basis for
>the Internet's first independent governance mechanism, the new Internet
>Authority would be able to set a wide range of Internet-related fees of
>any amount without constraint, float bonds of any amount which must be
>funded by future revenues, as well as collect additional fees of any
>amount to invest for undefined possible future needs, all such to be
>paid for by you, me and our children, the Internet's users of today and
>tomorrow, without their review, approval or control.
>
>The new version of the proposed bylaws for the new Internet Authority
>will likely be submitted today to Ira Magaziner of the White House,
>under the terms of the White House "White Paper" released last January,
>to create the replacement for the US Government's current contractual
>arrangement for management of the Internet, which is set to expire today
>( Sept. 30, 1998). 
>
>But the new bylaws are completely devoid of any provisions to create any
>type of fiscal accountability for this, the Internet's first
>all-powerful, government-sanctioned independent Authority.
>
>Although the new bylaws make it clear that the source of the new
>Internet Authority's revenues will be the Internet's end users and
>service providers, it leaves all spending, borrowing, investment and
>other financial decision-making solely in the hands of the Corporation's
>board of directors, who's members specifically "have the duty to act in
>... the best interests of the Corporation and not as representatives of 
>their Supporting Organizations, employers  or any other organizations or
>constituencies."  (Article V, Section 8)
>
>Nowhere in the bylaws is the Board of Directors required to consult with
>any outside groups, experts, or other interested parties on how best to
>set its fees or plan its budget. 
>
>Nowhere in the bylaws is there any provision for any kind of independent
>budget review or hearing mechanism or approval process for the budget,
>borrowing, or any other fiscal decisions;
>
>And nowhere in the bylaws is there any provision for any kind of
>independent fee-setting review process or approval mechanism, either by
>those who must pay the fees (the Supporting Organizations, who represent
>the consumers of the services to be provided by the new Corporation) or
>by any independent body of fiscal experts.
>
>All these fiscal decisions are made solely by the new Internet
>Authority's own Board of Directors. 
>
>The relevant language in the proposed new bylaws makes this absolute
>power of the Board clear:
>
>FIRST, it gives the board absolute control over any spending or
>borrowing decisions:
>
>"Article IV, Section 1 (a)
>
>"the  powers   of  the Corporation will be exercised, its property
>controlled and its business and affairs conducted by or  under the
>direction of the Board."
> 
>SECOND, it gives the board absolute control over the fee setting
>decisions:
>
>"Article IV, Section 2. FEES AND CHARGES
>
>The Board shall set fees and charges for the services, rights and
>benefits provided  by the  Corporation to  the Supporting Organizations 
>and others, with the goal of  fully recovering the reasonable costs of
>the operation of the Corporation  and establishing  reasonable reserves
>for  future expenses and contingencies  reasonably related  to the
>legitimate activities of the Corporation."
>
>And THIRD, it gives the Board the sole authority and absolute control
>over setting its annual budget, with no requirement that it actually
>meet that budget or that the budget pass any kind of review process, all
>this in one simple line of the new Bylaws:
>
>"Article V, Section 25. ANNUAL BUDGET
>
>The Board  shall prepare an annual budget, which  shall be published on
>the Web Site."
>
>These three phrases are the total extent of any language in the new
>bylaws that might be construed as setting ANY spending, fee setting and
>raising, budgeting, borrowing, investing or any other fiscal constraints
>on the board of the new Internet Authority which will be the primary
>manager of the single most important communications resource in the
>world.
>
>Such an all-powerful and fiscally unaccountable organization as would be
>created by the new bylaws is a classic textbook "Public Authority" in
>its structure, and that is the crux of my problem with the fifth set of
>IANA bylaws released on Sept. 29. 
>
>Look closely at any publicly-funded independent Authority in the US and
>you will find a self-perpetuating, quasi-governmental organization whose
>spending decisions cannot be challenged, who spends the public's money
>like water, who has absolute power over its particular area of activity,
>but no accountability to the public. 
>
>In the present case of the bylaws for the new Internet Authority, there
>is minimal accountability for its policy decisions, and that is cause
>enough for concern. 
>
>But there is NO accountability for its borrowing, spending and
>fee-setting structure. 
>
>There needs to be some kind of mechanism in the new entity that will
>create a counter-force to the typical Public Authority's inevitable
>desire to grow and to spend more and more money and increase its sway in
>the world.
>
>The counter-force to spending increases could be a Budget Review
>Committee solely comprised of the groups that will fund  the new
>Internet Authority. Or it could be a Finance Committee made up of
>independent, world-renowned fiscal experts who have no vested interest
>in the new Internet Authority or the Internet per se. Or it could be a
>committee of government finance experts with experience bringing public
>spending into line. Or it could be some combination of the above.
>
>It would be a real tragedy if, in its first efforts at self-government,
>the Internet community were to hand over management of the Internet to
>yet another quasi-public Authority, who's essence is perhaps best
>defined in an article I co-authored nearly ten years ago:
> 
>"Authorities constitute a permanent, expansionist government, collecting
>and spending more and more public money, running up more and more public
>debt, and making more and more critical decisions on the public's behalf
>with each passing day. And because authorities do all this out of site -
>and beyond the control - of the general public, they constitute,
>finally, a Shadow Government."
>
>"Inside the Shadow Government," by John Strahinich and J. William
>Semich, cover article, Boston Magazine, November, 1989. 
>
>
>About J. William Semich:
>
>Currently:
>
>President and Chief Financial Officer 
>.NU Domain Ltd
>http://whats.nu 
>"One of the top 20 Top Level Domain Name Registries in the World"
>(Source: Http://www.domainstats.com/iso.cfm) 
>
>
>Formerly:
>
>- Director of Financial Analysis for the City of Boston
>- Chairman, Finance Committee, Massachusetts Bay Transit Authority
>Advisory Board (The MBTA's Budget Review and Approval body)
>- Financial Adviser to the Mayor of Boston for Tax Policy and Planning
>- Assistant to Collector-Treasurer, City of Boston
>- Deputy Director and Executive Secretary to the Board, 
>Boston Economic Development and Industrial Commission
>
>Achievements:
>- Co-author, "Inside the Shadow Government," Boston Magazine, November,
>1989, selected as one of  the "Top 10 Magazine Investigations of 1989,"
>by Investigative Reporters and Editors, Inc. (IRE);
>- Lead investigator and financial consultant, WBZ-TV Boston's "I-Team,"
>in-depth 1995 investigative report on the Mass. Turnpike Authority's
>actions over a ten year period to extend it's life using fiscal
>manipulations;
>- Co-author, "The Money Pit," Boston Magazine, September, 1986,
>investigative article on abuses by the Mass. Convention Center Authority
>in its redevelopment of the Hynes Convention Center
>
>
>